Brussels is reviewing whether crypto lending should fall under its Markets in Crypto Assets (MiCA) framework. The European Commission initiated a targeted consultation on May 20, 2026, asking stakeholders to weigh in on areas originally excluded from MiCA, including DeFi and crypto lending.
MiCA's initial rulebook did not cover crypto lending. The reevaluation comes as lending vaults direct billions of dollars into on-chain credit markets, often without resembling conventional lending services.
The legal status of these vaults currently relies on non-binding interpretations that position them outside MiCA and existing EU fund regulations. Yuriy Brisov, an EU digital assets lawyer and partner at Digital Analogue Partners, said the law pertaining to vaults is unclear.
Brisov noted that vaults perform the economic functions of lending while distributing other functions across smart contracts and multiple participants, rather than consolidating them within a single company. This distribution creates regulatory problems.
Decentralized lending protocol Morpho's infrastructure provides a specific example. Its Vault V2 architecture divides responsibilities among an owner, a curator, an allocator and a sentinel. The curator configures strategy and risk parameters, while the allocator executes allocations and the sentinel holds powers to reduce risk.
This distribution of roles does not map onto existing regulatory models, making it difficult to identify a relevant "provider" of a regulated lending service under MiCA. Bitwise is set to launch on-chain vaults via Morpho, highlighting adoption of such structures.
Jonathan Galea, a partner at Cahill Gordon Reindel, explored this issue in a client update on lending vaults and their position under EU financial regulation. His analysis considered how vault structures interact with MiCA, stablecoin rules and European fund law.
Galea said "lending vaults solve more practical problems than they create," emphasizing the need for differentiated treatment rather than broad categories.
Some vaults direct fragmented liquidity into lending markets, while others may buy and sell crypto assets. A broad regulatory category covering "DeFi lending" could inadvertently capture structures with diverse economic functions and control dynamics.
The Commission's consultation closes on Sept. 30. The outcome could determine whether lending vaults remain outside MiCA's scope or become subject to a new regulatory framework.
